PM Daily Market Commentary - 12/4/2017
Gold fell -4.60 [-0.36%] to 1278.60 on moderately heavy volume, while silver dropped -0.13 [-0.79%] on moderate volume. The buck moved higher [+0.32%], a probable side effect of the passage of the tax cut over the weekend by the Senate.
Gold gapped down at the open in Asia, and then traded mostly sideways, recovering somewhat by the end of the day in New York. The southern doji was a bearish continuation. Forecaster remains bearish, moving up +0.02 to -0.30. Volume continues to plunge – that's not a bearish sign. The NR7 candle suggests that prices could move strongly in either direction.
COMEX GC open interest fell by -9,410 contracts. That's another 2% fall in open interest at COMEX.
Rate rise chances (Dec 2017) remains at 90%.
Silver also gapped down at the open, and largely traded sideways for the remainder of the day. Silver's print was spinning top/NR7, which was not rated. Silver forecaster remains ina downtrend, rising +0.10 to -0.32. Volume in silver is also declining. Silver's NR7 candle also suggests price could move strongly in either direction.
COMEX SI open interest rose by -4,269 contracts.
The gold/silver ratio rose +0.34 to 78.25. That's bearish.
The miners moved lower; GDX dropped -1.29% on moderately heavy volume, while GDXJ fell -1.42% on moderately light volume. Both ETFs broke below their month-long trading range. Candle prints were all bearish continuations. However, the forecasters moved higher: GDX +0.23 to +0.06 (buy!), GDXJ +0.12 to -0.08. HUI also rose, +0.07 to -0.03. Forecaster sees something it likes. It will be interesting if this proves out. The chart actually looks fairly scary; the breakdown below support is definitely bearish.
Today, the GDXJ:GDX ratio fell, as did the GDX:$GOLD ratio. That's bearish.
Platinum dropped -1.42%, palladium plunged -2.81%, while copper moved down -0.21%. Palladium had a very bad day - its forecaster issued a sell signal today. Both palladium and platinum have moved into relatively strong downtrends. This isn't great for the rest of the PM complex.
The buck rose +0.30 [+0.32%] to 92.90, with half of the move coming on a gap up open and the rest occurring during the trading day. Much of the driver for the move – probably – came from the passage of the tax cut bill by the Senate. It appears however that this may mark the extent of the upside juice that the buck will get from this issue, and its not very much.
Crude had a bad day, dropping -0.84 [-1.44%] to 57.45. The dark cloud cover candle had a 34% chance of being a reversal. That's not all that bad. Forecaster plunged, losing -0.45 to -0.13 (sell!). We'll need the API report tomorrow to rescue crude from further declines, I think.
SPX gapped up about 20 points overnight due to the passage of tax cuts on Saturday, rallied to new highs, but then was hit by a wall of selling towards end of day, ending down -2.78 [-0.11%] to 2639.44. The closing black marubozu had a 55% chance of being a bearish reversal. Forecaster ticked lower -0.11 to +0.60. Volume was very heavy. It appears as though a number of participants view the passage of tax cuts as a sell-the-news event – as do I. Financials did best (XLF:+1.52%) while tech did worst (-1.61%).
VIX jumped +0.25 to 11.68.
TLT edged up +0.05%, gapping down at the open but then rallying as the SPX over-the-weekend rally was sold at end of day. TLT remains in an uptrend. TY is struggling a bit more, falling -0.11% but printing a white marubozu candle which has a 46% chance of being a bullish reversal. TY remains in a downtrend, but its forecaster rose +0.09 to -0.24.
JNK rallied along with equities, but fell along with them towards end of day, ending down -0.05%. JNK's forecaster moved deeper into downtrend, losing -0.11 to -0.59.
CRB fell -1.05%; 4 of 5 sectors fell, led by energy (-1.96%).
Most of today's price activity was a reaction to the tax cut progress – the gap up at the open, and the sell-the-news plunge at end of day. Today could well mark the highs for SPX for a while. That's a bold statement after such a long move higher, but I don't really see how much more “bullish” things can get than this. What else can Trump do that (the Republican) Congress will go along with? The relatively tepid dollar rally supports this thesis.
A fair number of traders agree with me: the rise of the VIX over the past week says that traders are loading up on bearish bets.
Meanwhile, the pair of NR7 candles on gold and silver is a pattern that could go either way. Breakdown of the miners looks bearish, but forecaster saw something it liked in its universe of things that affects prices of the miners. If SPX puts in a swing high tomorrow, we could be in for some excitement across the board. Otherwise, the PM downtrend will probably continue.
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